We’ve had a string of data in recent days pointing to the US economy being stronger than anticipated. Deutsche Bank's US economists released an updated outlook with the key change being they no longer expect a mild recession to emerge during 1H 2024 and now foresee 2024 real GDP growth at a solid 1.9%. Those economists continue to anticipate that the first rate cut will come in June but that the Fed will only cut rates by 100bps this year.
On the subject of potential rate cuts and their timing, starting at noon we will hear from Cleveland Fed President Loretta Mester, then Minneapolis Fed President Neel Kashkari, followed by Boston Fed President Susan Collins. Philadelphia Fed President Patrick Harker speaks after the market close. Coming off Friday’s January Employment Report which showed an upturn in wage growth and yesterday’s ISM Non-Manufacturing Index which supports stronger economic growth but showed a leap up in its Prices subindex, we expect them to reiterate a slow road to the Fed’s first rate cut.
Our suggestion to readers is to join us in watching 10-year Treasury yields and the dollar index to gauge the market’s reaction to those comments.
For more, be sure to read our Daily Markets column published each day by Nasdaq.
Model Musings
Artificial Intelligence
“Colossyan taps AI to generate workplace learning videos, remixing, re-animating and editing footage of one of several virtual avatars against changeable backdrops. Users can enter a script to have it “read” aloud by Colossyan’s text-to-speech (TTS) engine, which also translates the script into over 70 languages.” Read more here
Digital Infrastructure & Connectivity
“Meta is upping its capital expenditure (CapEx) for the year ahead, and now expects to pump between $30-$37bn into infrastructure projects in the next 12 months, a $2bn increase on the high end of the previously expected range. The company’s CFO Susan Li said in a statement to shareholders that continued investment in the hardware needed to train and run artificial intelligence systems would necessitate an increase in spending.” Read more here
Space Economy
“Intuitive Machines is ready to go to the moon. The company announced Monday that its first lunar lander has completed all final integration milestones and is now encapsulated in SpaceX’s Falcon 9 payload fairing, where it will stay until launch on February 14.” Read more here
The strategies behind our Thematic Models:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.